Law and Economics of Security Interests in Intellectual Property

With the overall purpose of exploring the main research question, i.e., “what is the preferred legal framework to optimize the use of IP as collateral in debt finance, in order to solve the problems in funding R&D activities and to foster innovation?”, this dissertation adopts a law and economic analysis into the in-depth examination on the impacts of legal risks and transaction costs from different aspects. Firstly, for further exploring the economic reasons for promoting IP collateralization, it goes back to the basic theories of debt finance and recalls the role of collateral in solving the informational asymmetry problems between debtors and creditors. It shows that the signaling role of IP in the ex ante selection process and the disciplinary role of IP in the ex post lending relationship can help the lenders to reduce the overall default probability in the first place. Then, by discussing some potential conflicts in the legal rules for IP collateralization, it establishes a conceptual assessment framework for evaluating the frameworks for IP collateralization in China, the US, and the international efforts done by the UNCITRAL. The comparative study shows the difficulties in coordinating secured law and IP law and sheds light on our understanding of how to build up an efficient legal regime for IP collateralization, especially for China. At last, the dissertation looks into the enforceability of anti-assignment or anti-attachment clauses in the IP licenses in the case of IP collateralization. It shows how different legal rules can change the time of negotiation and the bargaining powers among parties, consequently change the equilibrium of the lending decision, and eventually have impacts on investment decisions. It demonstrates why simply prioritizing the objectives of IP law may not be the best solution to solve the conflicts between IP law and secured transaction law.